HP Networking targets wireless LAN growth

How is HP Networking targeting growth opportunities in the wireless LAN market?

HP Networking needs to grow its wireless LAN business to capitalize on networking budgets moving from fixed to wireless

It is launching a broad range of new hardware, software and services to address gaps in its portfolio and match competitors

Extending SDN to the campus and, in particular, wireless LANs creates strong differentiation and opportunities to create new revenue-generating services

Allocation of networking budgets for enterprise campuses and offices is increasingly shifting from fixed to wireless. Underpinning this is the continuing growth of smart devices, accelerated by the bring-your-own-device trend. Investment is focused on making wireless pervasive, supporting increasing device densities through capacity and throughput improvements, security, and enabling new revenue-generating services. Education, healthcare, hospitality, retail and leisure, and manufacturing remain key sectors, accounting for over 40% of spend. Service providers are also investing heavily in wireless LANs to expand hotspot coverage and cellular data offloading capabilities to reduce the impact of rising traffic on core networks. Overall, worldwide investment remained robust in 2013, with shipments increasing 14.4% to US$4.3 billion. But growth decelerated from 24.2% in 2012 due to the maturing 802.11n (11n) upgrade cycle, combined with delays caused by the ratification of 802.11ac (11ac) in late December and ongoing challenging macroeconomic conditions.

HP Networking (HPN) is aiming to accelerate growth and increase market share in 2014. Growth opportunities will come from a new refresh cycle initiated by demand for first-wave 11ac access points, as customers seek to optimize network performance and support new 11ac devices. Adoption of cloud-based managed wireless services among smaller businesses and larger distributed organizations looking to simplify operations, as well as vertical-specific solutions will also contribute to growth. At the end of March, HPN made major enhancements to its wireless portfolio to capitalize on these growth opportunities. Mobility is a key part of its New Style of IT corporate initiative. But competition is intensifying, with many competitors having already established their value propositions. HPN needs to accelerate and catch-up.

Enabling agility and delivering consistent user experiences

HPN’s portfolio enhancements are designed to create consistent user experiences independent of network connection by improving application performance. HPN addresses network complexity by providing unified control, management and policy enforcement across fixed and wireless. It also aims to enable agility and transform business processes through SDN applications, and to turn the network from a cost center to a source of revenue. The announcement included:

HP Cloud Managed Networking: This is a key component of the announcement. Targeting smaller businesses and distributed organizations, the service lowers capex with a pay-as-you-use opex model. It reduces the need for on-site IT resources by enabling remote management of access points with the Cloud Network Manager portal. Access points available through the service include the HP 365, 355 and 350. The service was developed by HP Labs and will compete against services from Aerohive, Cisco Meraki and Aruba Central. This is a small but fast-growing segment gaining traction. Cisco acquired Meraki for US$1.2 billion at the end of 2012, which gave it the technology, knowledge and skills, as well as an established customer base to accelerate its push into the market. Aruba Networks responded by launching its own service, Aruba Central, in Q4 2013. HPN’s own development is significant. It could have brought Aerohive to accelerate its progress, similar to Cisco and Meraki. But this was unlikely given its conservative approach to acquisitions following high-profile issues, and the potential high price of Aerohive, especially in light of its recent US$75 million IPO. It was also significant as it demonstrates HP’s R&D capabilities to launch something new following years of favoring an acquisition approach. But the utility model is not new for HPN, having worked with service providers including Swisscom to launch pay-as-you-use network offerings. Its experience will be crucial in rolling out the Cloud Managed Network service.

HP 560 and HP 517 11ac access points: 11ac will enable up to three times the throughput of 11n, providing fixed network speeds for smart devices and application performance improvements. The first wave of 11ac enterprise-grade access points was launched in May 2013, with Aruba Networks’ 220 series, Cisco’s 11ac module for the Aironet 3600 series, and Motorola Solution’s AP8232, 8222 and 8263 models. Meru Networks introduced its AP832 11ac access point in July, with Cisco launching its dedicated 3700 11ac series in October. HPN is relatively late with its 11ac proposition. But given that the 11ac standard was only ratified in late December, this is only a short-term issue, especially as Wave 2 will supersede Wave 1 in the next two years. But it has missed out on some early adopter projects and initial customer and channel mindshare, with Aruba, Cisco and Meru each having claimed 11ac technological superiority. HPN needs to address two important issues to close the gap on competitors. It needs to ensure investment protection for customers, especially with the migration from 11ac Wave 1 to Wave 2 to support multi-user MIMO technology. Cisco is pushing a modular approach that enables customers to make the transition and use existing access points. Aruba and Meru, however, are taking a more optimized approach with dedicated access points for Wave 1 and Wave 2, which will result in customers having to rip out and replace. It also needs to ensure price premiums between 11n and 11ac are less than 10% to match the aggressive levels set by Meru.

HP 870 and HP 850 Unified Wired-WLAN switches: HPN has to use its strong and growing position in the fixed switch segment, especially as more network budget is allocated to wireless LANs. It is the clear challenger to Cisco in campus and branch office networks, building on the heritage of both HP ProCurve in the mid-market and 3Com in smaller businesses. The new Unified Wired-WLAN appliances enable the deployment of consistent policy management across both fixed and wireless networks, something that the wireless specialists struggle with. HPN has focused on scalability, with the 870 supporting up to 30,000 devices and the 850 for medium-sized and large enterprises supporting up to 10,000. These build on the success of the 830 for smaller branch offices. A key feature is integrated security, including wireless IPS and embedded firewall for role-based access. These often require separate appliances.

OpenFlow-enabled access points: The key differentiator in HPN’s mobility strategy is the extension of SDN to the campus, and in particular wireless LAN access points through OpenFlow. The new HP 560 11ac access point will be the first to be OpenFlow-enabled, and a free software update will provide backward compatibility for the 11n HP 430 and 460 series. This complements the 50 switches already launched that are OpenFlow-enabled. SDN provides the platform to make networks more agile through greater application control and automation of real-time configuration. HPN was early to market with its Virtual Application Network (VAN) SDN controller. Combined with its SDN App Store, HPN has a unique offering in development-specific software-based solutions. The first to launch include the HP Network Protector and the HP Network Optimizer for Lync. HP Network Protector provides real-time threat detection and removes the need for additional security appliances. HP Network Optimizer for Lync provides traffic monitoring and automatically configures the network to improve voice and video quality. HPN will have a head start over its rivals in bringing SDN to wireless LAN, which it must capitalize on now to displace competitors in larger accounts. HPN needs to also invest in its channel to enable partners to develop, sell and integrate SDN-based wireless solutions. This will be a key component in determining the success of its initiative.

HP IMC with MDM: The HP Intelligent Management Center (IMC) provides a single control point for fixed and wireless multi-vendor network environments, making it an important part of competitive displacement initiatives. IMC combines with device on-boarding, access provisioning and network monitoring tools as part of HPN’s Unified BYOD Essentials solution. As part of the announcement, HPN is integrating this portfolio with mobile device management (MDM) products. It is working with Citrix and MobileIron to add more granular policy enforcement for users, applications and devices. Working with these vendors addresses a gap in its portfolio, but these vendors are also working with other networking vendors. It may have to acquire its own technology given the trend of consolation within the MDM sector, in particular IBM purchasing Fiberlink and VMware buying AirWatch.

HP Location Aware: Cisco’s acquisition of ThinkSmart, Aruba buying Meridian and Ruckus Wireless’ purchase of YFind Technologies has enabled them to launch analytic and location-based wireless LAN services. Specific vertical solutions based on these technologies can be turned into potential revenue-generation services. These include targeted marketing and advertising in retail, location of assets and personnel in healthcare, and enhanced monitoring and security in education. HPN is addressing this growth opportunity with its HP Location Aware SDN application, which also uses the VAN controller. It provides location accuracy to within two meters and requires less density of access points compared with competitors’ offerings. The HP Communications and Media Solutions unit has developed a proof-of-concept solution based on the application, which uses HP analytics software. The SmartShopper solution enables retailers and service providers to offer real-time location-based offers via customers’ smart phones. HP can differentiate itself further by using its breadth of hardware, software and services to develop a range for vertical reference architectures based on its Location Aware application and enable its partners to sell repeatable solutions.

Replicating success in enterprise switches with wireless LAN

HPN’s wireless announcements are comprehensive and address some important gaps in its portfolio, most notably the lack of 11ac access points, as well as cloud and location-based services. It not only matches its main competition, but also creates strong differentiation, in particular around its SDN applications. HPN needs to use its strength in fixed networking as a platform to accelerate its wireless LAN business. Its market share in enterprise switches was 13.0% in 2013, almost double that of its position in wireless LANs (6.6%). HPN’s wireless LAN business did regain momentum last year, with shipments increasing 15.5% after a relatively weak 2012, when shipments were up only 2.1%, which was well below the industry average. Growth was driven by China (25.1%), the US (12.9%), France (12.2%) and Germany (12.2%). It is in a strong position to maintain this momentum in 2014 and gain share, having created compelling reasons for customers to deploy both its fixed and wireless networks, underpinned by its unified management and SDN approach.